The forests of the world play a key role in providing resources for humanity including food, materials for commerce, clean water and as habitat for the planet's biodiversity. However, forests which cover about 30% of the Earth's surface currently play a relatively minor role in the management of global carbon and in the monetization of carbon. One of the reasons for this circumstance is the difficulty of measuring carbon flux over a given area of forest such that the amount sequestered can be verified and monetized. Models typically used for estimation of forest carbon flux do not capture the essential features of forest ecosystems that determine the net carbon (e.g., sequestered or emitted) of a forest. For example, below ground carbon is approximately twice as high as above ground carbon and any model or estimation that precludes below ground carbon is of no value. Yet, according to estimation routines and model programs used to infer forest carbon for carbon trading do not address soil carbon. Thus, inclusion of below ground soil carbon in methods to derive total forest carbon stores for managing and monetizing forest carbon would represent a vast improvement over current methods. Additionally, the world's forests, particularly the forests of the developing world, are under pressure from deforestation and degradation in part due to the cash value for forest products and for crops grown on deforested lands. Deforestation then is due in part also to the lack of a method to measure forest carbon and monetize it accordingly. The invention disclosed herein addresses fundamental issues related to measuring, verifying and accounting for forest carbon (above and below ground) that provides a means to manage forests on small and large scales. Effective management of the world's forests will be needed for a future where reduction of carbon concentrations in the atmosphere will be needed to slow global warming and associated climate change.
The use of a real-time measuring system, or system of systems, for forest carbon that is verifiable and can be uniformly accounted for provides the basis for monitization that can be understood by the financial community and investors. A framework in which forest carbon can be expressed in terms of shares of an investment, in some ways similar to certain types of stocks and equity funds, will allow forest carbon to be considered in terms of asset classes and investment risks in those asset classes. Investors design and adjust portfolios of investments based on risk and return. Another key component of the securitization of forest carbon is a reference or standard value benchmark that ensures that all carbon monetized is equivalent regardless of the forest location, type or other difference. Still another dimension of forest carbon essential for successful monetization is selecting a financial framework that resonates with the dynamic of forests as biological entities. Forests, for example, have defined growing seasons (e.g., summer) and periods of senescence (e.g., winter) and it is the difference between carbon sequestration in the summer and carbon release during the winter, that defines the net carbon flux as source or sink. While there is a wide range of security options those that offer periods of dormancy or features that restrict security sales/purchases for at least a period of one year are desired. In fact, if forests are to be managed for future generations, total periods of securitization should last for 50, 100 or more years. Thus, a forest carbon system that can be expressed in real terms of shares with given values and bounded by common benchmarks, as well as being compatible with longer term securities management would be essential to monetizing, managing and securitizing forest carbon. The invention described herein addresses methods to securitize forest carbon with the aforementioned features.
While the focus on securitizing forest carbon is needed, other essential aspects and intrinsic value of forests are often diminished. Biodiversity, for example is directly benefited by reductions in deforestation and degradation and, in many cases, diminishing forest habitats threaten organisms to extinction. Likewise, indigenous peoples that occupy much of the remaining forests in the developing world are themselves at risk for loss of culture and loss of forest products that define their lifeways. Thus, any additional features related to the securitization of forest carbon that ensured or placed a premium on biodiversity and on indigenous culture would be highly desirable. The invention described herein addresses methods to emphasize biodiversity and human culture by placing a premium on these features in any given forest location.